Hearing of the House Foreign Affairs Committee - "Unfair Trading Practices against the U.S.: Intellectual Property Rights Infringement, Property Expropriation, and Other Barriers"

Statement

U.S. Rep. Ileana Ros-Lehtinen (R-FL), Chairman of the House Foreign Affairs Committee, made the following opening statement earlier today at a Full Committee hearing titled "Unfair Trading Practices against the U.S.: Intellectual Property Rights Infringement, Property Expropriation, and Other Barriers." Ros-Lehtinen urged the Obama Administration to use all the tools it possesses to combat unfair trade practices against the U.S. and to ensure economic security for U.S. businesses abroad. Remarks by Ros-Lehtinen:

"It wasn't that long ago that we could watch other countries grappling with their economic difficulties with considerable detachment and relief that we were largely insulated from their troubles. Those days are long gone. As our economy has become increasingly integrated with that of the world as a whole, and as millions of jobs in this country are now based on exports, our economic future and prosperity are tied to events on distant continents.

"The unending crisis in Europe, the economic slowdown in China, and the sharp reduction of the growth rates in an increasing number of major countries mean that the global economy is already facing strong headwinds. That will impact us in many ways, and none more so than the threat to exports and the jobs they support. Even in good times, our exporters often find their paths blocked by an endless array of obstacles erected by foreign governments that range from quotas, licenses, and discriminatory regulations to currency manipulation, limits on investment, and mandated technology transfer.

"Some of these barriers are the product of antiquated ideologies or just plain ignorance, and the temptation to erect barriers to foreign business in order to support domestic industries is a strong one in every country, especially in times of economic stress. Those policies have had the effect of reducing the overall welfare of their own citizens while rewarding favored businesses with high profits they otherwise could not earn. But we bear the costs as well, and not only in terms of lost sales.

"In fact, it has been the resistance of countries such as Brazil and India to further liberalization that has held the Doha Round of global trade negotiations hostage for over a decade. As a result, high barriers remain for services, agriculture, and many other products where the U.S. leads the world. But in addition to these familiar obstacles, U.S. exporters face even greater challenges from predatory policies by foreign governments. This most prominent is the theft of intellectual property.

"Governments do steal intellectual property for their own use, but a far greater problem is their knowing toleration of widespread theft in their societies to the point of actually encouraging it. China is the most egregious example, where the U.S. Trade Representative estimates that 99% of all music downloaded from the Internet is done so illegally. The International Intellectual Property Alliance estimates that the loss to U.S. companies from copyright violations of records and music alone amounts to more than half a billion dollars annually.

"Pirated copies of American movies that have just been released in the U.S. are commonly on sale on the streets of Beijing and other cities within days, openly marketed under the benevolent gaze of the otherwise fearsome police. Despite years of promises by Beijing to crack down on violators and despite a succession of formal commitments to do so, the theft of intellectual property remains epidemic.

"Beijing claims that it is virtually powerless to stop its citizens from using the Internet for illicit purposes. However, that same regime devotes massive resources to controlling the Internet, including eliminating or blocking vast quantities of information that it finds objectionable, with little hesitation to use swift and harsh methods to enforce its commands. And yet it also claims with a straight face that it cannot prevent the unlimited theft of intellectual property from sites that operate openly and with unrestricted access.

"But intellectual property theft is only one of China's vast array of unfair trade barriers that include, among others: state-owned businesses using government power for their own ends, illegal subsidies of domestic companies, discriminatory regulation, a bureaucracy impenetrable to outsiders, currency manipulation, and a legal system that is all but worthless in enforcing contracts.

"China may have the worst record in unfair trade barriers, but U.S. firms face many other challenges around the world. One example is the expropriation of American property by foreign governments, especially by leftist governments. From the beginning of his reign, Venezuelan strongman Hugo Chavez made clear his intent to seize control of key industries, such as telecommunications, and has deliberately targeted American companies. For example, Chavez forced Verizon to sell its 30% ownership of Venezuela's telecommunications giant CANTV, with the government taking control of the balance of shares at bargain prices. And he has used his power to bludgeon major oil companies into forced sales and renegotiation of contracts that total several billion dollars.

"China and Venezuela are among the most outrageous and shameless predators, but they are far from alone. Unfortunately, we have only limited tools with which to create a level playing field for U.S. companies and provide them with protection. The most proven method is through enforceable free trade agreements with responsible countries. Our network of free trade agreements has created enormous opportunities for U.S. exporters, the most recent being the agreements with Colombia, Panama, and South Korea. But that remedy cannot be effectively used at present, in large part because the expiration of the President's Trade Promotion Authority has made the negotiation and approval of new trade agreements almost impossible.

"If we in Congress want to do more than talk about creating opportunities for U.S. exporters, especially at a time of economic difficulty, we must restore the President's authority to negotiate enforceable agreements that desperately will enable our entrepreneurs to compete effectively and to create the jobs so many Americans are searching desperately for. Although the image of the international marketplace as a place of civilized exchange, of trust and sanctity of contract, is often an accurate one, there will always be those in other countries who wish to use the power of the government to erect barriers against U.S. companies and individuals, and even to subject them to criminal behavior.

"In such a world, we must ensure that the Executive branch vigorously uses the tools it already possesses to deal with those countries that openly prey on U.S. businesses, including strong and unilateral measures to penalize governments which refuse to uphold their commitments and agreements. Only by so doing can we guarantee our economic security in an ever more integrated world, where enormous opportunity is coupled with many challenges, and thereby ensure that the U.S. will always remain the most prosperous nation on earth."